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Tuesday, October 16, 2012

Clearwire Corporation (NASDAQ:CLWR) To Gap Down On Latest Unfavorable Report

Shares
of Clearwire Corporation(NASDAQ:CLWR) are hammering down sharply in the
pre-market session in Tuesday on a report from Bloomberg that Sprint Nextel
Corporation(NYSE:S) currently not planning to make a bid for CLWR.

Shares
of CLWR were moving higher since past week and as of yesterday rose about 100%
on expectation that the recent deal between Sofbank and Sprint Nextel will
trigger the acquisition of Clearwire.

The
reason seems to be quite logical as Sprint has already paid $900 million to get
lease Clearwire from Clearwire for 2012 and 2013. So considering that, it may
not make any sense to buy Clearwire at the current price, which is believed to
be overvalued by an analyst.

“I
don’t talk about any specific detail of our strategy. I never do that in
advance,” Softbank President Masayoshi Son said in a conference call, answering
an analyst’s question about a potential deal with Clearwire. Sprint holds 48
percent of Bellevue, Washington-based Clearwire and has an equal percentage of
voting power, Clearwire said Oct. 11.

Shares
of CLWR have slumped 26% to $2.01 in the pre-open session.

On Monday, Ranked 3rd in
the cellphone industry in the US, Sprint is selling a controlling stake to
Softbank in Japan in lieu of $20.1 billion.

The deal was announced on Monday in Tokyo. It
puts Sprint Nextel as a tough competitor in the US market leaders like AT&T
and Verizon Wireless. However, it does not solve the underlying problems that
the company is facing.

Spring is based in Overland Park, Kan. It has
been limping along since the year 2005, when it had purchased Nextel. The union
turned sour very quickly and burdened Sprint with the cost of running two
unsuited networks while customers fled.

Softbank is a holding company that invests in
internet and telecom businesses. It has made its own move into the wireless
world in the year 2005 when it had acquired Vodafone Japan. It had turned the
business around, giving President Masayoshi Son the boost that he can make
Sprint a lucrative company again after running in losses for five long
years.